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Operational Review INTERVIEW WITH THE GROUP CHIEF EXECUTIVE OFFICER immediately bring the plant into profitability after they are commissioned at the end of the second quarter of 2017. Later this year we will start building a permanent coal/gas power station and we will equip the kilns to run on gas as well as coal, as they do in Nigeria. Were there any aspects of the business with which you weren’t satisfied in 2016? I think in general we performed very well. If there was any issue for us it was actually that we were producing a lot of cement and had to run most of our lines, including those we hadn’t yet converted to take coal. So when the gas supply fell to very low levels in the middle of the year, we found ourselves using a lot of LPFO to support production and meet the very strong demand we were seeing at the time. That hit our margins. Now we are fully capable of running on coal and the gas situation has improved so we have no more need for LPFO and stopped using it after September. Also, because we saw so much growth in Nigeria I think we concentrated on meeting local demand rather than exports, so exporting will be an area of focus in 2017. What are the main priorities for the business in 2017? We will focus on growth in revenues and EBITDA. We will develop our export capabilities by improving logistics so that we can export bulk cement to Ghana, and by establishing port facilities at Apapa in Lagos so we can get clinker onto ships bound for Cameroon. We have established an Export Organisation to take responsibility for ensuring we can execute our strategy. Another priority will be to maintain and improve cost leadership across Africa. Everywhere we operate we are the cost leader because we have built large, very modern, highly efficient factories and so we have many competitive advantages compared to other manufacturers with significantly older facilities. We will focus our efforts and our capital expenditure on improvements in 2017, rather than building and expanding. That’s because the currency situation has made it difficult to source enough dollars to fund the expansion in the timescale we had originally envisaged, where we would have about 75Mta capacity by 2020. Onne van der Weijde Group Chief Executive Officer Annual Report 2016 55 Now it will take a little longer to reach that level of capacity across Africa but we are still committed to the scale of the expansion. Given the pressures many other manufacturers are facing in Africa, I don’t foresee anyone else taking advantage even if we delay our entry into some markets, What is your focus of investment in the coming years? We have outlined our investment priorities very clearly: firstly, we will concentrate on reducing costs, improving logistics and increasing efficiencies through operational improvements and debottlenecking. Then we will look to develop import and grinding facilities in West Africa that we can feed from Nigeria because that is a win-win for both countries’ operations. After that we will look at brownfield expansions or plants in new markets that are capable of generating good returns. If the currency situation improves we can pick up the pace of expansion again, but for now we are satisfied with the plans we are pursuing. What is the outlook for Dangote Cement in 2017 and beyond? The Nigerian economy needs to recover to support building work but I can see plenty of signs for optimism. The Federal Government published a budget that includes ₦1,047B for infrastructure and that will need a lot of cement. As the oil and gas industry recovers we will see improvements in power distribution and a general pick-up in economic activity. I think Nigeria is a robust country and has the capability to bounce back, as will the other African countries into which we are expanding and gaining market share every year. So in summary, because we have pursued a good longterm strategy of diversification, cash generation and cost control, I am confident that the Company is in very good shape to build on the considerable success we had in 2016.

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